tempus fugit

Billy Tauzin is Partly Responsible for High Drug Prices

2015-07-26

This post is about ancient history, that is, something that happened ten years ago. Medicare Part D, the “prescription drug benefit”, was passed in Congress about ten years ago, at 3 AM, reportedly under heavy pressure from the drug industry. At the time, Billy Tauzin was chairman of the House Committee on Energy and Commerce, which “oversees the drug industry.” (Wikipedia)

Two months later, Mr. Tauzin resigned from Congress. He immediately became head of the Pharmaceutical Research and Manufacturers of America (PhMRA), at a salary of $2 million a year. He continued in this position for five years and resigned as of June 2010. We should note that he was recovering from cancer treatment at the time he resigned from Congress; his bills for this treatment were paid by the extremely generous insurance provided to members of Congress.

The problem with Medicare Part D from a cost containment standpoint is that it specifically prohibits the government from negotiating with drug companies over the price of drugs paid for by Part D. The Veteran’s Administration, which does negotiate with drug companies, pays much less for drugs (and refuses to cover some drugs.) It is clear that Mr. Tauzin protected the drug companies in the passage of Part D legislation, and for this protection, he received a cozy sinecure in the PhMRA. The PhMRA actually outbid the Motion Picture Association of America for Mr. Tauzin’s services; they had offered him $1.5 million a year to be their head lobbyist (see New York Times article below.)

The point is that legislation which enshrines advantages enjoyed by large companies, coincidentally saddling ordinary citizens with cumbersome, unaffordable bureaucracy, is brought into being by politicians who are elected by large majorities and frequently have long-term tenures in office. These politicians sell access and privileges to lobbyists who provide them with campaign money, endorsements, and infrastructure that creates positive publicity which, in turn, makes voters think that he (it’s usually a him) is “on their side.” In this case, the administration of what appears to be a benefit for Medicare-eligible citizens, drug payment, becomes a cash cow for the companies that provide the drugs and a headache for consumers (see the notorious “donut hole.”)

Wikipedia reports that Mr. Tauzin is now on the Board of Directors of Louisiana Healthcare Group. One other, related note: Tauzin was originally a Democrat, but switched to Republican (he apparently said the Democrats were unfriendly to conservatives and complained that President Clinton had welshed on a deal he had cut to stop a certain energy tax– see this New York Times article) in 1995.

Another favorite project of Mr. Tauzin’s (see the same New York Times article) was to start hunting clubs. He would buy land and then sell memberships in hunting clubs that allowed members to hunt exclusively on that land. The members were always lobbyists, who had money to spend on hunting club memberships. His biggest deal, apparently, was in 2003, when he committed a million dollars to buy 1,500 acres in south Texas to hunt deer. He signed up a number of lobbyists as members and claimed that he paid the same fee as the rest of the members to hunt there. The process of buying land, then selling memberships in hunting clubs for that land to lobbyists is clearly a conflict of interest in which he sells favors to lobbyists who pay for participation in his schemes; it is also completely legal.

Mr. Tauzin’s son, Billy Tauzin III, lost a very close race to succeed Mr. Tauzin as Representative to the US Congress in Louisiana’s 3rd District, to a Democrat.